House File 2394 - Enrolled
House File 2394
AN ACT
RELATING TO THE WHOLESALING OF RESIDENTIAL PROPERTY BY A
WHOLESALER, AND PROVIDING CIVIL PENALTIES.
3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. NEW SECTION. 543B.6A Wholesaling of residential
2 property.
3 1. As used in this section:
4 a. “Residential property” means real property that includes
5 no less than one but no more than four dwelling units.
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6 b. “Wholesaler” means a licensee, or a person represented
7 by a licensee, who holds an equitable interest, but not legal
8 title, in a residential property for the purpose of selling the
9 equitable interest to a buyer.
10 c. “Wholesaling” means the practice of a wholesaler entering
11 into an assignable contract with an owner of residential
12 property for the purpose of marketing and selling the equitable
13 interest of the residential property to another person.
14 2. A person must be licensed as a real estate broker
15 under this chapter, or be represented by a real estate broker
16 licensed under this chapter, to engage in wholesaling.
17 3. a. A wholesaler shall disclose all of the following
18 information in writing to all parties to a wholesale
19 transaction prior to executing a contract to purchase or to
20 convey an equitable interest to a buyer or other entity:
21 (1) The legal identities of all parties to the wholesale
22 transaction.
23 (2) An explanation of the wholesaling process, including
24 but not limited to disclosure that the wholesaler holds an
25 equitable interest in the residential property that is the
26 subject of the transaction and may not be able to convey title
27 to the property.
28 b. A wholesaler shall provide a copy of an executed agency
29 agreement to all parties to a wholesale transaction prior
30 to executing a contract to purchase or convey an equitable
31 interest to a buyer or other entity.
32 c. Notwithstanding provisions to the contrary contained in a
33 contract executed pursuant to this subsection, if a wholesaler
34 fails to comply with the disclosure requirement under paragraph
35 “a”, the seller or the buyer may cancel the contract at any time
1 prior to the closing of the sale of the residential property
2 without penalty, and may retain any earnest money paid by the
3 wholesaler.
4 4. An individual engaged in wholesaling in violation of
5 this section shall be subject to a civil penalty of up to the
6 greater of ten thousand dollars, or ten percent of the sale
7 price of each residential property for which the individual
8 engaged in wholesaling in violation of this section.
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9 5. The real estate commission shall adopt rules pursuant to
10 chapter 17A necessary to implement and administer this section.
______________________________ ______________________________
PAT GRASSLEY AMY SINCLAIR
Speaker of the House President of the Senate
I hereby certify that this bill originated in the House and
is known as House File 2394, Ninetieth General Assembly.
______________________________
MEGHAN NELSON
Chief Clerk of the House
Approved _______________, 2024 ______________________________
KIM REYNOLDS
Governor